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Surely they have to accept that they are currently third and they'll eventually become third in lifetime sales too, but I wouldn't say screwed, even if third place won't probably be as big as it was in 7th gen, it will be the second biggest third place in all the story of console gaming, and even bigger than all home consoles second places except in 7th gen, so quite a good result, more than acceptable, particularly considering that XB consoles typically enjoy a very high attach rate.
So it could be a bad result for paranoid control freak Ballmer, but it will be acceptable, although improvable, for pragmatic Nadella.

Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW!